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The GBP/USD pair has been on a steep downward trend in recent months as the US dollar’s strength has returned.
Following the release of strong American consumer inflation data, the GBP/USD fell to its lowest level since November 2020. It is currently trading at 1.3088, which is about 8% lower than its peak in 2021.
The economy is expected to have grown from 6.5 percent to 9.3 percent year on year. Strong GDP figures will provide an incentive for the Bank of England (BOE) to maintain its hawkish stance.
The pair’s decline continued on Thursday after the United States released strong consumer inflation data. According to the Bureau of Labor Statistics, American inflation rose to 7.9 percent in February as the cost of most goods increased.
Airline tickets, food, gasoline, and used cars were among the most popular items.
Excluding volatile food and energy prices, the core CPI increased from 5.8 percent in January to around 6% in February. As a result, analysts anticipate that the Federal Reserve will adopt a more hawkish tone next week, in line with the European Central Bank’s hawkish decision.
The GBP/USD pair will then react mildly to the most recent UK GDP data, which will be released on Friday morning. Economists anticipate that the UK economy increased by 0.2 percent in January after falling by 0.2 percent the previous month.
Analysts believe that this production performed well in January because the UK began reducing its Covid-19 restrictions this year.
In recent months, the GBP/USD pair has been under intense pressure. It dropped from a high of 1.4250 to a low of 1.3085. The pair has fallen below the 50-day and 25-day moving averages.
Most importantly, it has fallen below the key support level of 1.3175, which was the year’s low. As a result, the pair is likely to continue its bearish trend as bears target the next key support level at 1.300.